A specialty insurer is chasing more than $5 million from a California towing company after a captive reinsurance deal went sideways.
New York Marine and General Insurance Company filed suit against United Towing & Transport Inc. in the U.S. District Court for the Central District of California on March 16, alleging the towing company failed to honor a guaranty agreement connected to a captive reinsurance program. The amount in dispute: $5,047,881.62.
The roots of the case go back to November 2019, when New York Marine entered into a reinsurance agreement with eCaptiv PC3-IC, Inc. - a Vermont-based captive insurer referred to as "PC3" in the court filing. Under that deal, PC3 took on the role of reinsurer for certain policies issued by New York Marine, itself a wholly owned subsidiary of Coaction Specialty Insurance Group (formerly ProSight Specialty Insurance Group).
United Towing separately executed a guaranty and indemnification agreement, individually guaranteeing PC3's "performance and obligations" under the reinsurance arrangement. In plain terms: if PC3 couldn't or wouldn't pay what it owed, United Towing was supposed to cover the gap.
According to the filing, that is exactly what happened - except United Towing didn't follow through either. PC3 defaulted on its reinsurance obligations, leaving New York Marine with more than $5 million in obligations that went unreimbursed. New York Marine served written notice of the claim on United Towing on January 30, 2026, demanding payment of $5,047,881.62 under the guaranty. The towing company, the filing states, has also failed to pay.
One detail in the guaranty language, as quoted in the filing, is worth noting. The agreement required United Towing to make payment within five business days of receiving written notice of a claim - even if it planned to dispute the amount. The guaranty states that the guarantor "shall first make such payment hereunder to Company and then dispute such payment." That type of provision, not uncommon in reinsurance fronting arrangements, is designed to keep cash flowing to the insurer while any disagreements are sorted out on a separate track.
The case is in its earliest stages and no determination has been made on the merits.
Still, for industry professionals, the matter shines a light on a familiar but persistent risk in captive reinsurance programs. Fronting insurers lean on collateral, trust accounts, and guaranty agreements to protect themselves when they issue policies on behalf of captive reinsurers. When both the captive and the guarantor fail to deliver, the fronting insurer is the one left exposed - and heading to court to recover what it's owed.
New York Marine is seeking the full amount owed under the guaranty, along with attorneys' fees and costs, and has requested a jury trial.
